Investing in Workiva: A $320 Million Bet Amidst Market Whispers

In the bustling hive of New York City, Eminence Capital has taken a most audacious gamble, acquiring an additional 1.08 million shares of Workiva (WK 0.48%) during the third quarter-a move that adds a rather substantial value shift of approximately $139.35 million to their portfolio. One must ponder if this is sheer confidence or a fool’s errand in a market often driven by whimsy.

What Happened

On a fine November day, the Securities and Exchange Commission unveiled Eminence Capital’s latest filings, revealing a strategic augmentation of their holdings in Workiva (WK 0.48%). This act of financial bravado has elevated their ownership to a princely total of 3.72 million shares, valued at a remarkable $320.52 million as of September 30-a date on which the market held its breath.

What Else to Know

In the grand tapestry of Eminence Capital’s reportable U.S. equity AUM, Workiva now constitutes an intriguing 3.89%, earning its place as the fund’s third-largest holding-an illustrious position amongst more titanic investments.

Top holdings after the filing:

NASDAQ:AMZN: $340.09 million (5.0% of AUM)
NASDAQ:GTLB: $324.92 million (4.8% of AUM)
NYSE:WK: $320.52 million (4.7% of AUM)
NYSE:CPNG: $303.79 million (4.5% of AUM)
NYSE:ATMU: $294.10 million (4.3% of AUM)

As of Tuesday, the price of Workiva shares languished at $86.28-a fall of 21% over the past year-while the S&P 500 surged forth, basking in a 17% increase. Such is the caprice of the marketplace, where today’s loser may become tomorrow’s darling.

Company Overview

Metric	Value
Price (as of Tuesday)	$86.28
Market Capitalization	$4.84 billion
Revenue (TTM)	$845.52 million
Net Income (TTM)	($46.80 million)

Company Snapshot

Workiva offers a cloud-based platform, a veritable oasis for compliance, regulatory reporting, data integration, and audit trail solutions.
This enterprise serves a diverse clientele including public and private companies, government agencies, and institutions of higher learning across the globe.
With a subscription-based model, it promises recurring revenue, a siren song for any discerning investor.

In the vast expanse of the technology sector, Workiva thrives, deftly navigating the complexities of regulatory and compliance reporting. Its formidable platform addresses multifarious data integration and collaboration challenges, catering to the exacting needs of both enterprise and institutional clients.

Foolish Take

When a fund, famed for its concentrated, long-term wagers, elevates Workiva into its top three holdings amidst whispers of improving profitability, it beckons one to ponder whether we ought to scrutinize the income statement rather than lament over the stock chart’s prior misadventures.

Workiva dazzled the fiscal stage with its third-quarter revenue, soaring to $224 million-an increase of 21% year over year, fueled by a splendid 23% rise in subscription and support revenue. More notably, the elusive specter of operating leverage is finally making its entrance. The non-GAAP operating margin has expanded to 12.7%, a striking leap from the 4.1% of yesteryear, whilst free cash flow margin reached a commendable 20%, doubling from 10% one year prior. Adding to this robust narrative, those generous patrons spending over $500,000 annually have swelled by 42%, affirming that Workiva’s growth is not merely a dalliance with small accounts but a solid engagement with lucrative clients.

In juxtaposition with Eminence’s other illustrious holdings like Amazon and GitLab, this appears less a speculative jaunt and more a steadfast bet on the resilience of recurring revenue and burgeoning margins. Thus, while the stock has succumbed to a 21% decline in the past year, the business fundamentals seem to dance joyfully in the opposite direction.

Glossary

Stake: A term denoting the ownership interest or investment a fund or individual holds in a company.
Position value: The total market value of a specific investment held by an investor or fund.
Assets under management (AUM): The cumulative market value of investments managed on behalf of clients by a fund or firm.
Reporting period: The designated time frame covered by a financial or regulatory report.
Buy (trade classification): A transaction wherein an investor acquires additional shares of a security.
Holding: The quantity of a particular security owned by an investor or fund.
Cloud-based platform: Software and services delivered over the internet, eschewing local installation on personal computers.
Regulatory reporting: The process of submitting requisite financial and operational information to governmental entities.
Data integration: The art of uniting data from disparate sources into a singular view for analysis or reporting.
Audit trail: A record chronicling the sequence of activities or alterations made to data or documents.
Institutional clients: Entities such as funds, banks, or governments investing substantial sums, as opposed to individual investors.
TTM: The twelve-month period concluding with the most recent quarterly report.

Ah, the wonders of investing-a realm where folly and sagacity dance in a delightful waltz. 💼

2025-12-31 03:18